Real Estate Broker Not Liable for Factually Accurate Statement in MLS

  Real estate brokers owe their clients fiduciary duties—they owe third parties, including adverse parties in a real estate transaction, only duties imposed by statute. The statutory duties owed to third parties include a general obligation of honesty, fairness, and full disclosure. A broker’s specific duties with respect to any listing or information posted with a Multiple Listing Service are specified in Civil Code section 1088.

  Section 1088 states that a broker is responsible for the truth of all representations and statements made by the agent of which that agent had knowledge, or reasonably should have had knowledge, in a MLS: anyone injured by a false or inaccurate statement may file a statutory negligence claim against the agent and broker. Absent anything untrue or inaccurate in a statement a seller’s broker made in an MLS, and absent damage from such falsity or inaccuracy, seller’s broker is not liable under section 1088.

  In Saffie v. Schmeling the issue was whether a factually accurate statement in a MLS concerning the existence of a Fault Hazard Investigation report and seller’s broker’s description of a conclusion contained in the report—that the property was “declared buildable by the investigating licensed geologist”—gave rise to liability under section 1088.

  Buyer contended that the passage of time between 1982—when the report was dated—and 2006 when the statement appeared in the MLS, rendered the Fault Hazard Investigation report unreliable and invalid, thus making seller’s broker’s statement in the MLS false or inaccurate. Both the trial court and Court of Appeal disagreed. There was nothing untrue or inaccurate in the summary of the report’s conclusions.  Furthermore, by disclosing a copy of the Fault Hazard Investigation report and associated approval letter during escrow—clearly dated in 1982—seller’s broker fully satisfied his duty to buyer of “honesty, fairness and full disclosure toward all parties.”

  At trial of the case, buyer’s broker did not do as well. The court found buyer’s broker and his firm liable to buyer in the amount of $232,147.50 for breach of fiduciary duty and negligence. This finding was not appealed.

   Mr. Daymude consults with clients and accepts cases involving real estate brokers and agents, including those where it alleged a broker or agent was negligent in the representation of their client or where a broker violated the duty of honesty, fairness and full disclosure. For other types of cases accepted, please scroll the Home and My Practice pages. If you are seeking a legal consultation or representation, call Michael Daymude at 818-971-9409.

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